Coalition for Tax Competition Letter to Congressman John Sweeney

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CEI joins more than 30 other free-market groups in praising New York Congressman John E. Sweeney for his strong opposition to UN and OECD tax harmonization schemes. <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Coalition for Tax CompetitionSeptember 23, 2003The Honorable John SweeneyMember of CongressU.S. House of Representatives416 Cannon House Office BuildingWashington, D.C. 20515Dear Congressman Sweeney,We are writing to applaud your efforts to protect American taxpayers fromthe tax harmonization and global taxation schemes of internationalbureaucracies. The Organization for Economic Cooperation and Development(OECD) and United Nations (UN) both receive about one-fourth of theirbudgets from American taxpayers, yet both bureaucracies have been pursuinginitiatives that are contrary to <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />U.S. interests.A United Nations panel, for instance, has endorsed the creation of anInternational Tax Organization that would have the power to impose globaltaxes. Either of the options discussed in the report – either carbon taxesor levies on financial transactions – would undermine America’s competitiveadvantage in the global economy. The UN report also seeks to curtailjurisdictional tax competition, a policy that will harm nations such as theUnited States since our economy benefits when jobs and capital flee high-taxwelfare states.The OECD also has been pursuing policies that hurt America. The Paris-basedbureaucracy has a “harmful tax competition” project that is designed to stopthe flow of jobs and capital from high-tax nations to low-tax nations. Butsince America is the world’s largest beneficiary of tax competition, thisscheme is a direct threat to US national interests. Since the bureaucrats atthe OECD receive tax-free salaries, it should come as no surprise that theyare insensitive to the importance of lower tax rates and pro-growth taxpolicy, but that does not mean they should be allowed to attack thesovereignty of jurisdictions that do have policies that boost economicgrowth.In any event, American taxpayers should not foot the bill for misguidedpolicies. Recent events have demonstrated that international bureaucraciesoften are hostile to US interests, but this antipathy is not limited to“foreign policy” issues. We believe the tax harmonization and globaltaxation plans of the OECD and UN are bad tax policy – and we also believethat American taxpayers should not subsidize their statist agendas. If thesebureaucracies insist on pursuing anti-free market tax policies, they shoulddo so without any financial assistance from the United States – particularlysince poor people around the world will suffer if developing countries arediscouraged from using tax policy to promote economic growth.Last but not least, we are concerned that tax harmonization proposals are athreat to fundamental tax reform. All major tax reform plans – including theflat tax and the national sales tax – are based on important principles suchas taxing economic activity only one time and only taxing economic activityinside national borders. Yet the schemes being pursued by the OECD and UNassume that governments should double-tax income that is saved andinvested – even if the income is earned in another jurisdiction. Needless tosay, American taxpayers should not be subsidizing internationalbureaucracies that are trying to create roadblocks to a simple and fair taxsystem.